Persistent fears over the health of the Spanish economy saw London's leading shares index open firmly in the red today.

The FTSE 100 Index was more than 1.5 per cent or 85 points lower at 5565 in early trading amid speculation that a raft of Spanish regions were poised to ask for government bailout funds, increasing the likelihood that the country itself will turn to the EU for help.

The yield on 10-year Spanish bonds rose to a euro-era high of 7.5 per cent in a sign that investor confidence in the country's ability to control its finances is increasingly waning.

Greece also returned to focus as officials from the EU, European Central Bank (ECB) and International Monetary Fund (IMF) prepared to meet with the country's government to discuss progress with its budget pledges.

If Greece is unable to deliver the spending cuts and tax reforms necessary then the so-called troika are unlikely to be forthcoming with further aid and a Greek exit from the single currency bloc will be back on the cards.

Financial stocks came under pressure with Aviva falling nearly 4 per cent or 10.9p to 283.8p, Royal Bank of Scotland dropping 7.2p to 197.5p and Barclays dropping 4.5p to 155.2p.

A forecast from a Chinese central bank adviser that China's economy could wane further in the third quarter also deepened concerns about global growth and hit resource stocks.

Polymetal International fell 30p to 796p, Anglo American dropped 70.5p to 1958p and Evraz shed 8p to 226.4p.